Low pension returns `add to debt problems`

Workers throughout the UK received the lowest returns from their pension funds for five years during 2007, new figures have revealed.

Research by Moneyfacts has shown that the average pension plan returned growth of just 5.41 per cent during last year, compared with an average increase of 9.17 per cent in 2006. Growth in 2005 was an average of 19.91 per cent.

As a result, many consumers planning for retirement may have to look at debt management schemes before they leave their employment, in order to get finances in order.

Richard Eagling, of Moneyfacts, said: "After enjoying four successive years of strong investment returns, most pension holders will have seen only modest gains to their policies during 2007."

Earlier this week, the Pensions Advisory Sevice said that money purchase schemes are set to replace pensions as the savings method most promoted to employees.